Most of the businesses providing funeral and other services pertaining to the dead are mom-and-pop operations catering to local needs.

But with deflation eating away at the economy and the population aging, some firms — including funeral services and manufacturers and sellers of Buddhist altars for the home — are desperately trying to survive.

The approach to the future taken by one altar merchant, Fukuoka-based Hasegawa Co., may surprise many. Its flagship store in Tokyo’s prime Ginza shopping district is full of what officials call objets d’art.

Store manager Mitsuru Taira proudly points to a black lacquer-painted wall hanging with a cherry blossom pattern. It covers hinged double doors that, when opened, reveal a tiny Buddha carved from a fir tree.

“This is just a prototype of what we can offer to urbanites who don’t have space for a large altar,” he said.

There are many more surprises. An 8 million yen altar, which just looks like a splashy version of the traditional black-and-gold boxes adorned with ornamental hinges, is in fact equipped with an electric stove that automatically heats an incense box after its doors are opened. Another, costing 60 million yen, features elaborately carved doors made from Yakushima pine more than 1,000 years old.

The firm spent some 400 million yen on the store, which also has a museum, at a site only a stone’s throw from such designer boutiques as Louis Vuitton and Tiffany & Co.

“The amount we’ve invested in this store is extraordinary,” Tomoshi Murata, Hasegawa’s corporate communications manager, admitted. “But it’s an important part of our brand-building strategy, as well as a base for spreading our message worldwide.”

Behind the firm’s aggressive pursuit of brand image is a mounting need to accommodate today’s customers, whose lifestyles have diversified and adhere less to traditional Buddhist practices.

Hasegawa is undoubtedly the current industry leader, with annual altar sales of 20.7 billion yen. It is also the only altar merchant that has gone public, being listed on the second section of the Osaka Securities Exchange, and is the only firm in the business to expand nationwide, with 139 outlets.

But the outlook for the 2 trillion yen “bereavement services” industry as a whole is murky, according to experts.

A recent investment seminar in Tokyo attended by nearly 300 analysts, fund managers and investors featured presentations from Hasegawa and Koekisha Co., a major funeral service.

In his presentation, Hirotaka Shimizu, president of Kamakura Shinsho, a Tokyo-based publisher of an industry trade journal, outlined the reasons for concern.

Shimizu said customers are increasingly favoring simpler altars and funerals, thus spending less money on these goods and services. People only buy altars or tombstones once in a lifetime, he pointed out. In addition, there is no guarantee that the elderly, who now provide a huge customer base for altar retailers due to their wealth and relative adherence to Buddhist traditions, will remain a rich strata of society in the future.

Competition is also fierce for the nation’s 5,000 funeral firms, 4,000 altar merchants and 6,000 tombstone retailers amid the sluggish economy and resultant falling prices.

“We think the industry will continue on a course of slight decline,” Shimizu said.

To buck the overall trend, Hasegawa has gone on the offensive, trying to expand further in the Tokyo metropolitan area, where 26 percent of the nation’s population is concentrated. This market has not been penetrated as deeply as other regions, Murata said.

It is also expanding into the tombstone business, a lucrative field where such monuments sell for 2 million yen to 3 million yen apiece.

Hasegawa is reaching out beyond just the elderly rich. The company recently opened a store in Tokyo’s bustling Shibuya district, a mecca for the fashion-conscious young.

“We want to present a style of healing for a wide spectrum of customers, from the elderly to the young,” the company said in papers presented at the seminar.

Koekisha, a 70-year-old funeral service listed on the Tokyo Stock Exchange, is no less aggressive in pursuing change. The company had mainly offered its services in Osaka, but has grown rapidly in Tokyo since it set up its first funeral hall in Setagaya Ward in 1997.

Managing Director Takeshi Yoshida said Asians have a particular aversion to corpses, which they consider impure. “We call (this problem) the ‘3 Ks’ of the funeral industry. The images associated with the departed are ‘kitanai’ (dirty), ‘kusai’ (smelly) and ‘kowai’ (horrifying). How will funerals change if the 3 Ks are eliminated?”

Last year, Koekisha started embalming services, which were previously rare in Japan, and expects robust growth in this area. So far, the company has embalmed 1,449 bodies, according to officials.

Embalming is popular, Yoshida said, because, unlike in traditional funerals where the dead are quickly cremated, families and friends have ample time to view the dead and bid farewell. And it will hopefully help change the “bad image” associated with the industry, he said.

“Japanese have a custom of cremating the dead right after they pass away,” Yoshida said. “However you explain it, that is precisely because the deceased are shunned for the three reasons.”

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